Sensex gains 2,000 points in 6 sessions: What's fueling rally?
What's the story
The Indian stock market is on a winning streak, with the benchmark Sensex gaining nearly 2,000 points in six consecutive sessions. This is its longest daily winning streak since late April. Today, the index rose by almost 400 points or about 0.5% during the session. The Nifty index also mirrored this upward trend. The current rally in the Indian stock market can be attributed to proposed GST reforms, S&P Global's upgrade of India's sovereign rating, and easing geopolitical concerns.
Market performance
Sensex nearing record high
The Sensex is now about 5% away from its all-time high of 85,978.25, which it hit on September 27 last year. The Nifty's record high is also down by a similar margin from its peak.
Economic indicators
GST reforms and sovereign rating upgrade
Prime Minister Narendra Modi recently announced next-generation GST reforms in his Independence Day speech. The changes are expected to simplify rates, lower prices of several consumer goods, and boost consumption. Meanwhile, ratings agency S&P Global upgraded India's sovereign rating from BBB- to BBB on August 14 while keeping the economic outlook "stable." This is seen as a long-term positive for the Indian economy and could attract fresh global funds.
Global influence
Geopolitical concerns easing
On the geopolitical front, there are indications that the Russia-Ukraine war could end soon. Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky are set to hold direct talks to resolve their differences. Market sentiment is also bolstered by expectations of a rate cut by the US Federal Reserve in September and hopes of an earnings revival contributing to market resilience.
Investment risks
Challenges ahead for Indian market
Despite the positive market trends, there are still major challenges. The looming tariff risk from the US and continued selling by foreign portfolio investors (FPIs) could limit gains in the Indian stock market this year. The Indian government has warned that nearly $50 billion worth of goods will be impacted once a 25% US tariff comes into effect on August 27.